Such a program, which would likely exempt smaller nonprofits, could produce several million dollars in annual revenue as service costs rise, state financial support remains unpredictable, and political pressures and changes in state law limit the city's capacity to increase taxes.

This is about bringing in new money, not switching current taxpayers into an optional approach.

The city has roughly 73,800 parcels valued at $21.5 billion, said Dave Gawenda, city treasurer. That includes 1,201 exempt parcels — excluding city, Dane County and Madison schools property — valued at $5.7 billion. If state and university property is excluded, the city exempts nearly $1.5 billion in nonprofit property, which would produce about $15 million in revenue for the city if fully taxed.

Currently, 17 tax-exempt entities have negotiated arrangements with the city — usually after a change to the property — to make payments in lieu of taxes that will total $877,000 for 2012.

No one envisions the city will seek to get the full tax payment from all nonprofits.

In Boston, under its new program, nonprofits that own property valued at more than $15 million are asked to increase payments over five years until they reach 25 percent of what they'd pay if they didn't have nonprofit tax status, the city's website says. The system also gives nonprofits credits for providing benefits to the community.

Can someone explain to me why they pay voluntarily? It's not truly voluntary, is it? There's some lurking coercion, some extortion, isn't there?

IN THE COMMENTS: Irene said:

"Mandatory volunteerism" is the progressive's way of treating everyone like children. It's one of my favorite oxymorons.

Schools first introduce this approach by requiring children to participate in mandatory duties shaded vaguely as "voluntary" activities that benefit the community. Example: "Earth Day cleanup" for the grade schoolers or "orientations" for first-year law students that require arboretum clean-up or Habitat-for Humanity work.

If tax payment is shrouded in "voluntary" language, it makes the maliable feel like they are participating in the general good. Part of the progressive community. Part of the group think.

Why would exempt entities make voluntary payments? Because the city has a lot of discretion to approve (or deny) changes the entity may wish to make to its property. Want to divide a large room into two smaller room? The city will need to issue a building permit. Want a kitchen for serving meals? The city's health department will need to inspect the kitchen. Cities have suggested to non-profits that the cities' paying customers might get quicker service than the non-paying customers.

My bride was on the board of Pres House on the UW Campus. This is one of the nonprofits this curmudgeon would love to have pay protection. And, this is NO DIFFERENT than the mafia boss extracting protection from local businesses. Secular progressives strong arming religion. Lovely.

"Mandatory volunteerism" is the progressive's way of treating everyone like children. It's one of my favorite oxymorons.

Schools first introduce this approach by requiring children to participate in mandatory duties shaded vaguely as "voluntary" activities that benefit the community. Example: "Earth Day cleanup" for the grade schoolers or "orientations" for first-year law students that require arboretum clean-up or Habitat-for Humanity work.

If tax payment is shrouded in "voluntary" language, it makes the maliable feel like they are participating in the general good. Part of the progressive community. Part of the group think.

They started by trying to assess the value of tax-exempt property. Once the city assessor arrived at an estimated value for a given property, they sent a letter to the institution, giving them a chance to disagree about the value of their property.

Then, when the values were established, the city applied its tax rate to that value and concluded that if all of that property were fully taxed, the city would receive $423 million more in tax revenues.

With that information in hand, Boston next formed a committee to study the issue and come up with a more fair way to distribute costs.

The committee recommended a few principles. They suggested that any payments be voluntary, that the city recognize the value of the services provided by the institutions, and that smaller nonprofits continue to be entirely exempt.

In the end, Rakow sent letters to forty institutions asking them to make voluntary payments based on the committee's formula. The payments would be at the rate of 25% of the rate for taxable property; the 25% represents the portion of the tax bill that goes for police, fire, and streets services in Boston, a figure that would be higher in Madison. There's also a 50% deduction to recognize the services provided by the nonprofits. Any institution with less than $15 million in value remained completely exempt, a threshold that would have to be lower in Madison.

If I was a government entity, I would not go down the road of taxing non-taxable corporate entities.

You know why? Because government corporate entities (local, county, state, etc) are non-taxable corporate entities, and if the non-profit taxation can of worms gets opened, why not have the bigger government entities tax the smaller?

Don't laugh. That system worked for thousands of years. It's called feudalism, and as the obligations of fealty flowed upwards so did the payments.

It's called a "PILOT" (payment in lieu of taxes) and has a wikipedia site http://en.wikipedia.org/wiki/PILOT_%28finance%29. (Of course everything and everyone has a wikipedia site--isn't it time for someone to update Ann's?_

The concept is long familiar to those who reside(d) in DC--the feds pay in lieu of property tax on such things as the White House. '

AJ doesn't go far enough; it's time to end non-profit corporations. Some are good, most are either incompetent or corrupt. The entire process also creates an intrusive regulatory burden that spills beyond non-profits.

I think there are people who specialize in keeping crap from getting added.

My bio has been up for years, and there were times when some blogger of whatever prominence has tried to update my bio with some crap he wrote about me, some blogospheric dispute he was involved in, linking to his blog or his friends' blogs. That's the kind of updating my bio attracts, and it's awful.

The alternative ends up being a bland bio full with stuff that doesn't seem to justify having a bio on Wikidpedia at all.

Yeah it's really "voluntary" at the point of a gun. These progressives are mealy mouthed charlatans. It's like that mafia goon who suddenly shows up one day to your shop and explains how for a "donation" you will be protected from the other mafia goons.

I've been thinking of an alternative system of taxation where you would be given the option to direct your taxes to specific government departments and a portion could be sent to charities directly and it would count as if paid to the treasury. It's just so infuriating to know that 100% of my taxes go to the the most incompetent organization I know of on the planet.

If we could direct our tax payments, then this would create a kind of competition where departments that became efficient and effective would attract the most money. Many would be downsized or eliminated BECAUSE WE WOULD NOT SUPPORT THEIR WASTE.

PatCA said... One little city in CA requires a $20 "processing fee" when you pay your $20 business license!

Years ago, Colorado voters passed an amendment to the state constitution known as the Taxpayers Bill of Rights (TABOR), aka Amendment One. TABOR required government get voter approval for tax increases and limited the amount they could collect to a formula based on inflation and population increases. Any excess collections had to be refunded to the population unless voters approved letting them keep it. Since TABOR passed (IIRC, early 1990s), some tax increases have passed and others were rejected. The voters allowed them to keep some surplus collections and made them return others. The end result was that during the good economic times, the growth in government was more limited than in many other states. Things were still tight in tough times but it would've been much worse had they been able to increase government like they wanted (see California).

Several years ago, governments decided to just enact a bunch of "fees" instead of taxes. They got the state supreme court to rule that since they're called fees and not taxes, they weren't subject to TABOR limitations. What do you do when your own supreme court doesn't follow the law? This just cemented my opinion that a high percentage of judges are little more than failed lawyers with the necessary political connections to get judicial appointments.

It doesn't strike me as being that odd. I mean, think of Harvard University in Boston (Cambridge). Billions of dollars tied to a particular location. Water lines go in, sewer lines go out. If there's a fire, they call the fire department; if there's a crime, they call the cops. Why the heck shouldn't they pay? Ultimately, they use the city services just as much as a taco stand across the street.

Regarding why you might pay when you don't have to -- it's all a question of options, isn't it? If you've got a conspicuously good deal at a time when the city's cutting back, sooner or later they're going to try and change the law. When that happens, you'll pay full price, and keep paying forever. The rational thing is to pay just enough that the city doesn't think it's worthwhile to change the law.